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Orange Juice Futures Surge on Hurricane Irma, Hit Four-Month High

September 8, 2017 at 16:17 by Andrew Moran

Orange juice prices are trading at their highest levels in four months as Hurricane Irma is set to slam into Florida. The weather event, which is expected to make landfall this weekend, will not only impact oranges but also other foods, including beans, sugar cane, and watermelons.

November orange juice futures surged $0.0715, or 4.89%, to $1.535 per pound at 16:02 GMT on Friday on the ICE Futures exchange. Orange juice prices are trading at their best levels since the middle of May and the commodity is on track for a weekly gain of about 15%.

Despite its sloppy start to the year – year-to-date, orange juice has tumbled 18% — the commodity is paring some of its losses.

Hurricane Irma has been identified as a Category 5 storm and is traveling with winds of 157 miles per hour, or even higher. It has also hit parts of the Caribbean and is on the path of Florida, Georgia, and South Carolina.

Investors are becoming increasingly nervous over Irma because the Sunshine State accounts for two-thirds of all US production of oranges. Florida orange farmers have already been devastated by citrus greening, a bacteria that causes oranges to drop before their ripe enough to be picked, that has created the worst harvest in 50 years.

Alan Konn, partner and managing director of Price Asset Management, told MarketWatch on Thursday that Irma could create negative long-term effects to the state’s orange crop.

The damage to the orange crop is twofold: both short term disruption but also, to the extent crops are completely destroyed, it could have a longer term effect since it takes a few years to grow an orange tree to production, thus limiting supply for a longer period.

Although many Americans have decreased their appetite for the classic breakfast staple, other items at the grocery store could experience a jump in prices. The region produces vast amounts of potatoes, tomatoes and grapefruits – the state is also a key player in the cotton and timber markets.

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